Inside the Industry: global rail logistics connecting Italy and Europe to the One Belt One Road network

With President Xi Jin Ping re-elected to serve another term as China’s paramount leader at the 19th Communist Party Congress this month (Oct 2017), the One Belt One Road (OBOR) infrastructure project has been given fresh impetus.

The OBOR - One Belt One Road initiative is a central part of President Xi’s vision for China to secure and increase trade with the rest of the world. It aims to develop new infrastructure worth more than $1 trillion, especially railways and highways, to connect countries across three continents to China. While the exact numbers and details remain imprecise, there is no doubt the Chinese have the political will and economic power to ensure that OBOR becomes a reality. Already the reaction in Europe to OBOR has been positive and economies within the EU region stand to gain.

President Xi’s upcoming five-year term in office will be the crucial period for the OBOR concept and European transport and logistics service providers, including Contship, are working towards this timeframe. Interconnecting railway linkage lies at the heart of OBOR and economies and companies which have a head start on this will be the biggest winners. Better, faster and more inter-connected rail links that OBOR will bring will cut the time and distance between Asia (especially the new production centres in mainland China) and Europe, according to transport analysts.

This is already happening.

China’s Europe-bound freight-train service known as the CR Express launched in 2011 and already provides regular rail services from 16 Chinese cities and calling at more than 12 cities in eight European countries. Volumes at the end of 2016 reached 145,000 TEU (+480%) vs 2015 with analysts forecasting a further huge improvement for 2027 up to 636,000 TEU transported by an average of 21 trains per day used especially for cargo requiring faster transit times such as high value, high tech, cars, luxury, FMCG etc. (Source: Roland Berger Study. Eurasian Rail Corridors)

Contship’s rail network is already locked into this and the centrepiece is the service between Melzo and Duisburg in Germany and ultimately Rotterdam which will be crucial to the OBOR thrust into central Europe with several prospects of direct services to connect Italy directly from Poland. The service provides a fast link to the Rotterdam logistics hub, and extended connectivity from and to the UK, Ireland, Iceland, Scandinavia, the Baltic region and Russia. Northbound cargos are mostly composed by “Made in Italy” products, while southbound volumes are mostly represented by commodities. Contship has also seen increased demand for intra Europe trade via rail which confirms an improved awareness by transporters and shippers about rail solutions available to and from Rail Hub Milano (RHM). Contship believes that as customers become more aware that RHM lies at the heart of OBOR it will yield long term gains.

As an early supporter of the OBOR concept, Contship will continue to invest in efficient and modern rail services that facilitate faster connectivity between strategic European logistics hubs.